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JAMB Economics 1988 Question 23

Question 23

Theory of Costs and Revenue

Which of the following is TRUE at the quantity of output where Average Cost (AC) per unit has reached its minimum level?

  1. A.AVC = FC
  2. B.MC = AVC
  3. C.MC = AC
  4. D.AC = AFC.
Show the answer and explanation

Answer: C (MC = AC)

Explanation

The marginal cost curve cuts the average cost curve at its lowest point, so MC = AC there.